The £10,000 EPC C cost cap and exemptions, explained

How the planned cap works

The planned cost cap is £10,000 per property, and it is the most a landlord would be required to invest over a 10 year period. The government response of 21 January 2026 sets it out. It replaces today’s cap of £3,500 including VAT, which belongs to the current minimum standard of EPC E.

The cap is a limit on what you must spend, not a target. A landlord whose home meets the standard after £2,000 of work has no more to do. A landlord who has spent £10,000 and still falls short can register an exemption instead of spending further.

Nothing here is law yet. A statutory instrument is expected to come into force in 2027. The detail below follows the government response and may change in the regulations, so read it as the planned design.

	Today	Planned
Standard	EPC E	EPC C equivalent by 1 October 2030
Cost cap	£3,500 including VAT	£10,000 per property
Cap exemption length	Mostly 5 years	10 years
Maximum fine	£5,000 per property in total	£30,000 per breach, per property
Status	In force	Regulations not yet laid

What counts towards the cap

The response is specific about what counts. These items count:

• Relevant energy efficiency measures installed on or after 1 October 2025.
• Third party funding that you receive, including funding from government schemes. The response names Warm Homes: Local Grant and ECO4 among those that count.
• Reasonable EPC assessment costs, including the EPC you must commission after the works to show compliance.
• VAT on the work, which is zero rated for installing energy saving measures until 31 March 2027, then 5% from 1 April 2027 (HMRC VAT Notice 708/6).

One exclusion is clear in the response: funding received from the Boiler Upgrade Scheme does not count towards the cap. That is published policy, but the regulations are not yet laid, so the final rule may differ.

This matters for a heat pump. The Boiler Upgrade Scheme grant is £7,500 for an air-to-water or ground source heat pump, and a landlord who owns the rented property can apply through an MCS installer. If the grant does not count as spend, the part of the cost that you pay yourself is what moves you towards the cap. The page on the Boiler Upgrade Scheme for landlords covers eligibility, and the blog covers the cap question directly in does the Boiler Upgrade Scheme count towards the EPC cost cap.

Warm Homes: Local Grant has its own rule that bears on this. Public money cannot be used to meet the legal minimum, so EPC F and G rentals need a registered exemption before they can receive that funding. See the Warm Homes: Local Grant page.

The low value rule

For a property valued below £100,000, the planned cap is lower, equal to 10% of the property’s value. In practice that means the lower of £10,000 or 10% of value. A flat valued at £80,000 would have a planned cap of £8,000 on that basis. The response frames this as a property value adjustment exemption, with a 10 year validity.

You would need a valuation to rely on it, and the regulations will decide what evidence is accepted. Do not assume a figure for your own property without checking the final rules.

The exemptions, in one table

The response lists the exemptions below. Several already exist today and are being amended. The list may be refined when regulations arrive.

Exemption	What it covers	Length stated
Cost cap	£10,000 spent, or the next cheapest improvement would take you over	10 years
Property value adjustment	Lower cap for homes valued under £100,000	10 years
Negative impacts	Evidence a measure would harm the property	10 years
Solid wall insulation	Landlord chooses not to install it where it is the only remaining measure for the fabric standard	Not specified in the response
High cost	Even the cheapest recommended improvement exceeds the cap	Not specified
All relevant improvements made	No further recommendations on the EPC	Not specified
Third party consent	Tenant, freeholder or planning authority consent refused	Typically 5 years
New landlord	Recently became a landlord	6 months

Exemptions are registered on the PRS Exemptions Register. When one expires, the landlord must try again to make improvements. The response also says the government will improve the register significantly and make enforcement easier through the private rented sector database that comes from the Renters’ Rights Act.

Worked example (modelled, not a real project)

This is an illustration, not a quote and not a real project. Every input is stated so you can swap in your own.

The property. A two bedroom mid terrace, currently EPC band D, valued above £100,000, so the full £10,000 cap applies. Mains gas boiler near the end of its life.

Assumptions (invented for illustration, not sourced prices):

• Loft insulation top up, draught proofing and other fabric work recommended on the EPC: £2,800.
• Two EPC assessments (before and after works): £240 in total.
• VAT is at 0% because the work is done before 31 March 2027.

Heat pump inputs from this site’s sourced figures:

• Typical air source heat pump cost before grant: around £12,000 (Energy Saving Trust, page updated 23 September 2026).
• Boiler Upgrade Scheme grant: £7,500.

Line	£
Fabric work (assumption)	2,800
EPC assessments (assumption)	240
Heat pump cost before grant	12,000
Less Boiler Upgrade Scheme grant	minus 7,500
Heat pump cost paid by landlord	4,500
Counted towards the cap if BUS is excluded	2,800 + 240 + 4,500 = 7,540

On these assumptions the landlord reaches £7,540 of counted spend, which is under the £10,000 cap. The cap exemption would not apply, because the measures can be completed within it. The landlord’s total outlay is the same £7,540, and the grant is separate.

Change one input and the picture changes. If the fabric work were £5,500, the counted spend would be £10,240, which is over the cap. The landlord would then reach the cap before completing everything, and the planned cap exemption would be in play for a period of 10 years, provided the evidence is in order.

Two cautions. First, the heat pump here is optional: the planned rule does not oblige a landlord to replace a working heating system with one, and the smart readiness route is the alternative. Second, the example assumes the regulations treat grant funded spend as the response describes. If the final text differs, the arithmetic changes. The same modelled sum, with your own figures, is available in the landlord calculator.

How the cost gets met

The cap defines how much you must spend. It says nothing about where the money comes from, and there are several routes, each with its own dates.

• Boiler Upgrade Scheme: £7,500 for an air-to-water or ground source heat pump. £9,000 only where oil or LPG heating is replaced and there is no mains gas connection, from 21 July 2026 to 31 March 2027. One grant per property.
• Warm Homes: Local Grant: England only, for lower income households in EPC D to G homes, privately owned or privately rented. A landlord’s first property can be fully funded, and from the second property the landlord contributes 50%. The window closes 31 March 2028.
• Warm Homes Loan Scheme: a lender loan, not a grant, open to private landlords. Heat pump loans go up to £20,000.
• ECO4: closes on 31 December 2026.

The grants and funding page lays these out side by side.

When the cap is not the right thing to focus on

Do not plan around the cap if the home already meets the planned standard. A property rated C or above on the Energy Efficiency Rating on an EPC lodged before 1 October 2029 stays compliant until that EPC expires, on the response’s transitional rule. For those homes, the sensible step is to note the expiry date and diary a review.

Also, do not treat the cap as a reason to avoid insulation. Fabric work is the first step of the planned standard, and it is often the cheapest part. On many homes the question is whether the fabric steps alone bring the property to the line. The EPC C 2030 and your heating choice page explains the order.

Next step

Look up the certificate for each rented home, list the recommended measures and put an honest price against each. Then compare the total with the planned cap. The EPC deadline checker and the landlord calculator help. If you want independent firms to price the work, send an enquiry on the quote page: relevant firms contact you, with no charge to you and no obligation.